and you know, although they are in one of the best areas for data centers and they have been putting in nine data centers so far this first half and probably 15 by the end of the year, and they do have nuclear, and they do have all the hookups that they need to have, again, this is a story that is still in the future, and in the meantime they're going to grow earnings by 5% to 7%, which is in line with your average utility. so the stock may be a bit ahead of itself. >> the final thought on dominion? >> i think he's right. it is ahead of itself. you get this halo effect of a.i. and nuclear now. so these stocks like just jump like cisco. you're adding billions of market cap with no earnings. >> thanks for watching "power lunch." "closing bell" starts right now. welcome to "closing bell." i'm mike santoli in for scott wapner. this make-or-break hour begins

with wall street shaking off a setback as stocks stage abroad a moderate rally. orderly out there. earnings, a retreat in treasury yields and belief that the economy is in a sweet spot. here's a look at the scorecard with 60 minutes to go in regulation. s&p 500 grinding higher from some early losses, up about half a percent as we speak right now. you see mega cap losers from yesterday down, that would include nvidia and united health. a more mixed picture for the nasdaq. a lot of movement below the surface in some big names off the bat. not quite a third of a percent. the russell 2000 has been higher all day actually, at about 1.6%. bank stocks have been strong. they're continuing to trade up on some pretty clean, reassuring earnings reports, financials often move higher with small caps. morgan stanley the standout. nvidia making another run at its all-time intraday high, above $1.40 a share.

the semis more broadly are mixed. we'll go deep in a bit. first our "talk of the tape." have markets sidestepped the pre-election weakness we were promised? has the tenacious rally made investors too optimistic by now, or are the bull market fundamentals just that good? here to discuss all of it, gabriela santos, jpmorgan global market strategist and encore crawford portfolio manager at alger. thank you so much for being here. it's hard to find too much fault, gabriela, with how the market's behaving in terms of cirque likal leadership and banks being rewarded for new numbers. it sends a good macro message. the question is we felt like this before, we've had grote scares that followed this. so how do you think the setup is going into earnings season at a high? >> i think we need to clarify what we mean by good economy. and what we mean in terms of how we should express that in the stock market. so in terms of the economy, it's

doing fine. but at the margin, we subcommittee deceleration -- see some deceleration, normalization in growth rates. this is especially true in the consumer still doing good enough, but we have to be careful to translate that for consumer discretionary, staples, even travel and leisure where we're seeing normalization. but what we heard from banks and so far great start to the earnings season, is that good enough, normal kind of consumer that keeps the overall economy on track, we would just prefer to still express that via higher quality companies. so for example, large caps over small caps. and some sectors that also have not just a cyclical tailwind but also have more structural tailwinds and here thinking of health care and industrials. >> is that because in part you think that this earnings revival that we're expected to see in the broader list of stocks is either priced in or not likely to come around, or we're still on watch for that waning of the broader economy?

>> i think it's mostly -- there are two stories in earnings now. and we've had very divergent stories for a few years now. there's the decelerating but great results out of mega cap tech with high expectations. so very jittery there. and then we have the entire rest of the market which was it seems finally coming from an earnings recession. now i think in terms of the growth rate, what we expect -- there are some risks around two issues. the first is nominal growth, normalizing or decelerating, which companies are actually going to be able to keep pretty good revenues, and then margins. margins last season gave a little bit of convection that they seemed to be troughing for the first time in two, three years. but which companies exactly can still maintain margins. so i don't think it's a broad cyclical low-quality kind of earnings or kind of macro environment. >> yeah. it seems like it has to be kind of execution gets rewarded. we'll see if that does come to pass. we talk about tale of two or

more stories here. within growth and within the big themes that you would focus on, the market has really differentiated among some. just in the near term. microsoft's been sideways for months now. obviously nvidia pushing the highs, but hasn't made one since june. meta and other names are in favor. how do you think the sort of broader landscape shapes up at the moment? >> yeah, i think what you're seeing is a bifurcation in those companies that are able to generate revenues from a.i. here and now versus those that are having to spend in order to get a.i. revenues at some point in the future. and the market is losing a little bit of patience with the companies like amazon or microsoft for the likes of nvidia and meta. and so i think as you go across all sectors, you're seeing this massive bifurcation in the a.i. beneficiaries versus not. even yesterday asml was plagued with a whole slew of their own

issues. and it's become kind of a big laggard relative to the a.i. beneficiaries along with rest of semi cap equipment. and so you're just starting to see this breaking of correlations inside of sectors, which i find is great for us as we're stock pickers. but it makes for a challenging market. >> i would say challenging but arguably healthier because everyone was complaining when these stocks were treated as just sort of one big block and -- and very, very broad and thematic. when it comes to something like microsoft, i mean, it's funny because it seems as if that stock was really given credit up front for having a monetization strategy for a.i. you were getting subscriptions per seat and all the rest. why is it now not viewed quite that way? >> i think as the capex cycle is coming to unfold, our belief is -- and last time i was on the show we talked about how capex was going grow in '25, '26, '27, and '28. for all of these hyperscalers.

the market is starting to digest that because it does take from your free cash flow. now i would argue that this happened in the early years of cloud. you know, 10, 15 years ago. aren't we glad that they spent that way on cloud, you know, 1.5 decades ago. >> sure. >> we're seeing the same kind of cycle today where the revenues are going to come. they'll just come at a slower rate. now microsoft assures us that they will come with a high roi. so whatever expenditure they will make, there will be an almost immediate roi. let's see as they go through the next year. >> gabriela, you know, this -- this theme unfolded -- chatgpt comes to wide notice, almost as the stock market bottomed two years ago. and so you've had this -- it's been hard to pull apart exactly what was excitement and all this capitalrushing toward this massive a.i. opportunity, and just the cyclical recovery and we've priced in the fed

tightening and inflation's down. does it matter which it is in terms of how long this all lasts? >> so i think we have to remember 2022 was a really, really painful year for mega cap tech, earnings were down 22%, those were the kind of companies that led us on the down side that year. i think a certain part oreally there was a big effort to cut costs and to refocus a lot of these businesses. but then you got t tailwind of a.i. i think if the last two years had just been the cyclical rebound that story would have petered out by now. it is helpful to have this underlying layer of a.i. innovation, but i do -- we very much agree that it's much more of a story now of what is the return on investment over what time timeframe, how much has been pulled forward. and who are the other winners in this space. we were joking earlier about utilities being rewarded for the power generation.

also parts of industrials. also globally, places like taiwan, for example leading on the upside. so even there it seems like proof is in the pudding now even if it's -- a rightful dose of a.i. enthusiasm. >> yeah. it's funny, there's a school of thought that says you have to keep expanding the circle and finding where this theme is going to touch and unexploited areas. another that says don't over think it, right? it's -- taiwan semi and nvidia. and you know, in other words, it's just good morning irresistible in terms -- just going to be irresistible in terms of how numbers are going up. is it safe to think that way? >> you have to be balanced. there's going to be the winners of today that will continue to be the winners of tomorrow, ie taiwan semiconductor and nvidia. but there will be a broadening out as more companies start to adopt the technology and they drive operating profit because they're more efficient. so this is going to be -- going to play out over the next five to six years in phases. there is the here and now and then the ones that will generate

a lot of revenue over the next one to five years. and then there's the beneficiaries because they are adopting the technology inside of their businesses and making their businesses better and more competitive. i think it's a phased rollout, may we call it. >> sure. gabriela, when you talk about -- it's interesting to think about this and maybe if you want to map it onto the '90s experience because at some point the opportunities were real, the world did change, we priced a lot of it in. there was an overshoot to the upside. don't want to get into that. it doesn't seem like we're in that bubble territory specifically. but in terms of setting expectations for returns -- >> yes -- >> for markets right now, i went back and looked, we are now at 14%-plus annualized total returns for the s&p. 15 and 20 years ago you were at 29% annualized 3, 5 this year -- 35 this year. we pulled forward, and if you go

back to october of 1999, close to the peak, you're up 8.5% annualized. the average for the very long term. is it just again, you know, kind of can it be that positive, or do we have to moderate those returns from here? >> so for us i think there's one number that's really catching our attention and driving a lot of our conversations with clients which is 26%. that's how much the 60/40 is up over the last year. you're up 30 for equities, but you're also up 10% plus for bonds. >> right. >> doesn't mean anything about where we're going to go next quarter or six months from now, but it means a lot for where we're going to go the next ten years. the starting points do matter, and it suggests much more moderate, mid single digit returns from here. but i think a lot of the discussion we're having is super important because it's been very bifurcated. it hasn't been the entire market that's gone up. and some have gone up with commensurate earnings, meaning

the valuation didn't expand but not for all. it's not a time for autopilot here. it's a time to look for under appreciated growth and value opportunities. and it's within the u.s. especially large-cap market. but it's also overseas. that's not about global growth. it's been really idiosyncratic changes. so japan, india being heavily favored. and lastly we also have been talking so much about alternatives as a way to play a lot of these themes. >> sure. if you could kind of name a couple of things you're looking for this earnings season from the companies that you follow -- i'm actually most interested in the way the market reacts to some of these capex announcements or updates have guidance. i'm wondering what matters now. >> i think capex definitively matters. understanding what progress everyone is making on a.i., that matters. and granted it will be more glacial than we want to imagine right now. i think -- and across everyone else, it will be really company

specific. for microsoft we're looking at capex and making sure enterprise is okay. enterprise spending. for meat, it's a completely different ball of wax. what is advertising revenues doing. for amazon it's the consumer and aws. again, it's going to be more company specific as we're going through earnings season. but underlying it all we do want to see everyone making progress in attaining whatever their goal is in a.i. >> we have earnings hitting -- their heaviest flow in the next couple of weeks. at the same time that you would think based on history the market might clench up a little bit in front of a potential coin toss election. do your clients talk about that? do you have a sense that their behavior is different because that's hanging out there on the horizon? >> we do talk about it a lot. whether it's driving investment decisions is a different matter. and we like to say it's about the policy implication, not the politics. there i think if you look at betting odds they have been

moving around. generally speaking i think there's an expectation of a divided government. areas of the market that were on the lookout for in terms of election impact, long end yields which have moved up nearly 40 basis points if you look at the ten year, that's all about tax 2025 and all of the discussions about the deficit. and then the second is the dollar. it's -- strengthened by 1.5% the last two weeks, and i think that has a lot to do with the shift in betting odds tomorrow former president trump and the discussions around tariffs. >> yeah. it seems like this. we'll see how many versions we go through in the next three weeks. great to talk to you both, appreciate it. let's send it over to kate rooney for the biggest names moving into the close. >> hey there. morgan stanley shares today hitting new highs after the bank posted better-than-expected results for the quarter. that was helped by wealth management and rebound in investment banking after a tough 2023. ceoed at the pick saying earlier that he is particularly optimistic about that banking

division. >> what i'm really bullish on over time is the beginning chapters of growth across the center, the fulcrum, of our investment bank which our invest banking franchise. which is to offer advice, to do the underwriting business, but also how it affiliaters into our great markets business. i think it's going to take time. but we're seeing it begin. >> and shares of jb hunt today jumping after the company posted a quarterly beat on profits and revenue. that was boosted by improving demand for the logistic company's biggest segment intermodal services. back to you. >> all right. thank you. we are just getting started. up next, former dallas fed president robert kaplan is back. he'll tell us if he thinks another rate cut could be in the cards this year and maybe how big they might be. we're live from the new york stock exchange. you're watching "closing bell" on cnbc.

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stocks are green across the board recovering from yesterday's losses. investors looking ahead to key economic data out tomorrow to indicate what the fed's next move might be following last month's jumbo cut. my next guest advocating for 50 basis points cut ahead of the september meeting. says there's still room to cut here, but let's bring in robert kaplan for more details. goldman sachs vice chairman and former dallas fed president. great to have you here. it's really fascinating because the moment before the september fed meeting, i think the general sense on wall street was, wow, it's got to be 50, they're running late, it's maybe overdue. almost all the numbers we've gotten since that point have really told a story of maybe a stronger economy, maybe inflation coming down more slowly. what do you think -- where do you think that leaves us in terms of the forward path for the fed? >> my own view is if inflation

is running headline around 2.had or 2.5, the fed's got room to cut the fed funds rate down to, say, 4.25%, 4.5%. so the inflation's improved at least 100 basis points over the last year. we can have somewhat lower fed funds rate. so i think the -- the fed depending on as the economy unfolds is likely to do another 25 in november. i think they'll have a debate about december. the issue will be in order to cut below 4.25, 4.5, you need to see more sustained improvement going from 2.5 to 2, and the jury's out on whether or not we're going to see that. >> and then alongside that, is it your view that the economy is performing well enough that it really is and can be just about, you know, the progress on inflation toward 2%?

>> so the one -- the one big factor that i don't think's being talked about enough and i've talked about it before, is fiscal spending and the special open-ended spending programs, "inflation reduction act,"," chs act, with providing resiliency to the economy. we're running 6.5%, 7% of gdp deficit this year. historically high when you're at or near full employment. so i think that's given resiliency. and the other thing that we've benefited from this last year is an inflow of workers. we may not like the way we got there, but labor supply has gone up, and that's allowed the economy to grow faster with somewhat more muted inflation. it's unclear whether that trend's going to continue. so i actually have thought for some time and still think the economy's going to be resilient. i think it was wise to buy some

insurance on the labor market by doing the 50 basis points last meeting and maybe doing a little bit more. but i think with this amount of fiscal spending, the economy's going to be resilient, and it may again cause service sector inflation to be stickier than people would like. >> yeah. it certainly, you know, something that's not cooperating as much as other parts of the inflation bucket. although you know, you hear people point out and i mentioned this before, too, if you go back to 2017 into '18 when the fed was raising rates off of basically zero, you know, in a pretty orderly way, that was occurring while inflation was pretty consistently below the 2% target. in other words, it's not necessarily contradictory to have policy moving in one direction when you haven't -- when you're still well short of the goal. >> yeah. and remember, we've made a lot of progress on inflation over the last couple of years.

we've gone from, you know, 8%, 9%, down to 2% and a fraction. so the fed funds rate should complicate that. having said that, there are limits, and i think we still want to get inflation down to 2%. but -- and there's some other factors going on in the economy that investors are going to have to get adjusted to. term premiums on the treasury curve are likely to inch higher. credit spreads, i'm mindful, are historically tight right now. and early cycle tight. i don't know if we'll look back on that and say that's an anomaly, and the other thing that's going on is we probably can't keep fiscal spending at this level globally, witness china being a good example. gdp growth if we can't keep spending this way at the government level is going to drift down, and i think that's going to also have an effect on markets and resiliency and winners and losers among

companies. >> you mentioned term premiums. so therefore, that's kind of the premium that bond investors are going to demand for holding longer term debt, perhaps because of longer term deficits and things like that. at this point, where say the 10, 30-year treasuries trade, do you think there's anything anomalous about those levels around 4%, 4%-plus, that would suggest that there's that -- that that term premium is widening out, or is this where they would probably be normalli? >> well, so i've honestly got to tell you, i've read just about every research paper i can get my hands on about the effect of this excess fiscal spending and the fed balance sheet being now around $7 trillion. what's the effect on the term premium and what, in fact, the ten-year treasury be 25 or 50 basis points higher if you didn't have the size of the fed balance sheet. my own sense is our own research at goldman sachs suggests that

we're going to see the term premium inch up. and if it happens in an orderly way from here, it won't be such a problem. my concern is that there's a lack of duration buyers globally. we're going to sell $9 trillion of treasuries this year. we know banks are not buying duration. the fed is not buying duration like they were. foreigners are not buying it. what i worry about is a disorderly rise in terms premiums that's more destabilizing, and i don't know which it's going to be, but i think people should be watching out for it. >> yeah. among the things to be on the lookout for. pressure the time today. -- appreciate the time today. thank you so much. >> good to talk to you, mike. up next, pimco's aaron brown reveals where she sees the rally heading and where she's seeing d.arde in the market into ye en "closing bell" will be right back. izza. and with higher stroke risk from afib not caused by a heart valve problem,... ...we're going for a better treatment than warfarin. eliquis.

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the major averages hovering just below record highs as third-quarter earnings season gets into full swing. the earnings be enough to justify the markets' multiple and keep the rally going. let's ask pimco's erin browne. great to see you. yeah, itseems as if we've reached this moment where a soft landing both seems likely and also very much believed and priced in. where does that leave you with in terms of the markets? >> well, we've been talking about this since the beginning of the year, that in the second half we were going to see a broadening out of the breadth of

the equity market and see leadership not just from the magnificent seven but for the remaining 493 companies. and you're finally starting to see that over the last couple of weeks. you've seen the russell outperforming, the s&p equal weighted index outperforming the s&p. all of this is a sign of a healthy market. and then when you layer on top of that the setup going into the third quarter earnings season, the bar is pretty low going into earnings. the bar was for 3% year-on-year earnings, a step down from the second quarter where we grew 11% on a year-on-year basis. earnings are eking up with the positive earnings surprise. both the fundamental and the technical picture look pretty good into year end. that said, going into the november election, i do expect about a volatility particularly around the election, that's not a reason to stay out of the market altogether because as we

know it's policy, not politics, which drive the equity market. i think you have to keep some dry powder waiting for opportunities to get in when you see any type of volatility or -- or drawdown in the markets. so remain slightly overweight, looking for opportunities to add more risk, but really focus on a broadening out of sector rotation beyond just what's worked in the mega cap space over the last 18 months or so. >> yeah, i mean, it has been really evident even in the last couple of days that you've had not much going on at the index level or even weakness, but it seems like three quarters of all stocks are up. you do have that kind of cyclical tone to leadership. so you know, that checks off a lot of boxes. i guess i wonder if we do get a bout of volatility, what in particular would you look to to pounce on? >> so the sectors that we like, we still like a.i. now tech, as you've seen with asml earnings over the last 24

hours, there's a pretty big bifurcation between the haves and have nots in tech. i still think that the a.i. names will work. you've gotten a little bit of weakness in some of those names over the last few trading sessions. i think that that's really opportunistically a good time to start to buy back some of those names. i also really like the reits. you know, one of the sectors that is going to be pretty flat on a year-on-year basis by the end of the year has been the reit sector just because of higher interest rate costs eating into earnings. but i think that as we move into 2025, as we continue to see reits come down, i think that's going to be a sector that's going to do quite well over the next 12 months or so. so we're really focused on buying the reits. we also like the power a.i. names. there's been a lot of volatility since the summer in some of these names. i still think the independent power producers are really primed to do very well next year. as we see rate resets and as we

continue to see the a.i. build-out really increase power usage across the u.s. >> erin, how are you thinking about the moves in china, both on the policy side and then the way the markets so radically sort of repriced for them and now have been correcting off those highs? >> so china i think still remains a challenge in so far that we really need to see policy and fiscaling into that's meaningful in order to buy china as an investor as opposed to just a renter. we bought options in the china market that took advantage of cheap optionality to the upside. it's no longer cheap anymore, although it's certainly come back a little bit in recent days. i think to get long term bullish china, i need to see a lot more in terms of rectifying the challenges that they're having on housing, having more consumption-oriented fiscal spend, and really solving some

of the structural problems that have plagued china over the last 24 months. >> you know, we started out by talking about how everything does seem to be coming up -- softish landing, just a benign backdrop and maybe the fed looks like it's gotten things right. it wasn't really long ago. it's just a couple of months ago where we've seen that the labor markets eroding too fast. we've gone through these hot and cold kind of perceptions over the course of this year, a bunch of times. do you think there's a risk that we're just not -- the next growth scare is around the corner, or is it going to be an overheating scare, something like that? >> i mean, certainly the sort of boogieman for the equity market remains out there, inflation starting pick back up again. right now, all the trends that we're looking at whether it's housing costs or renting costs, some of the import inflation and the data that we saw over the last 24 hours from ppi earlier in the week and then import

data, this -- more recently is all suggesting that inflation is on a downward trajectory. we do think it's going to remain stickier as we get further, you know, closer into 2025. but you know, energy costs coming down does help. i think that the risk is if we were to see, you know, a real revamp of fiscal packages coming out after the election, that could potentially lead to higher inflation in late 2025 into 2026. but for now we feel very comfortable that the fed still has a green light to continue to cut rates given the fact that inflation we think will be cooperative certainly over the next six months or so. >> yeah. seems like starting from this level they have a clear path. maybe it gets more complicated in a couple of quarters. great to have you. thank you so much. erin browne from pimco. next, star chip analyst

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shares of nvidia climbing, recovering from yesterday's broader chip selloff on the heels of a disappointing earnings leak from asml. that stock still sinking today. nvidia getting hit with news that the doj is considering capping chip exports to some companies. bernstein research's stacy rascon, good to have you here. it sounds like there's a ton going on around nvidia, certainly there is. not to mention we have, you know, jensen is on the sisht out there kind -- circuit out there

kind of pof preaching the futur. the stocks up .7% this week, hanging onto the gain. separate out what matters and what might not for this one. >> yeah, yeah. you bet. yesterday took a hit along with the rest of the sector on two things. one was the -- the asml earnings leak which was interesting in its own rate and some of the export controls news. i think any hit it took on the asml report was probably not really justified because while asml reported, as we know now, was not great, the one bright spot for it was a.i. demand. seems like a.i. demand is still off the charts. about the only thing that is. but it's still very strong and clearly like that, that benefits nvidia. i do wonder if some of yesterday was more around some of the export control stuff, and what's going on there is there are stories that suggest that the u.s. is considering i guess they suggested capping the licenses that nvidia and other a.i. chip vendors can use to sell parts to

other countries, particularly i guess in this case the middle east. i'd say -- i'm not sure it's that big of a deal, i guess we'll see. caps in my opinion are not bans. they already have license, they're under licensing arrangements with the middle east. they have to get licenses to ship there anyways. and frankly, the other like outright bans that we've seen haven't slowed them down at all. so i'm not terribly worried about that. they seem to be more incremental than anything else. and we saw the stock yesterday was coming down before the asml. they dropped sharply and recovered a little bit afterwards. and so i think today it's kind of relaxing a little as it's clear that the asml news is not a direct read across and maybe the expert control stuff isn't as big a deal as people might have been worried at first. >> yeah. the market clearly, as you suggest, making its peace with whatever all this is. i know there's a way also of saying listen, this stock is where it traded four months ago. it had an absolutely massive run. it gets to $3.3 million market

cap. maybe it needs to hang out for a while and figure out exactly how long we're going to be in this lucky position of demand outracing supply into next year. so where do you think that sits in terms. investor expectations and how the stock is positioned? >> yeah. it's interesting, you sorts of look the last couple of months, it was in a lot of news. the stock took a big hit several months ago on the blackwell delay rumors. though does seem there were issues there, it really looks like they've worked through it without any problems. didn't really have any impact o. and i'd say since the stock was -- went to 90 bucks or something close to it, so it recovered off of that. that was a great entry point in hindsight. look, going forward, all of the checks on a.i. demand -- they're going to sell everything that they can make. and you mentioned jensen's out there. i think he's been on your channel more than once. >> sure. >> in recent weeks. and sounding very enthusiastic. it's -- it's the one bright spot in the whole semiconductor arena

right no now. one thing where we can say demand is probably going to exceed expectations, even expectations that i think are going up now. some of the other areas in semis i wish you could say that. you can't really say that now. >> for sure. speaking to other areas of semis, we have aren't that maybe qualcomm if it is considering some kind of a bid for intel might be waiting until after the election to sort out that decision. i don't think you're a fan of the idea of the combination, but where does that stand? >> to be fair, i hope they wait a little longer. i'm not a fan -- to be honest, if they would just if they were just taking some of the product pieces of intel, i could construct a these iand you could make that work -- thesis and you could make that work. i can't make the finances work if the feds come along with them. i can't. it's dilutive if you stock and if you start using cash it doesn't take a lot for the leverage to reach in my opinion what would be unsustainable levels. i really would not like to see qualcomm buy intel and take the fabs and to be honest, i don't

think intel is desperate enough yet to agree to a fire sale. and i don't think that they're split -- splitting the company at this point is on the road. the fabs can't stand on their own. they're losing -- close to $3 billion last quarter. $12 billion anal used. they can't stand -- annualized. they can't stand on their own. it's years before a business can stand on its own if they do it at all. >> a key point of intel not being in a spot where they would consider something like this. still in the investment phase, the $00 billion mark. thanks a ton. >> you bet. next, we're tracking the biggest movers as we head into the close. kate rooney standing by with those. kate? >> hey, mike. citi seemed bigger opportunities in a.i. for one tech firm and then the ceo sees trouble ahead for the beauty industry. all those details coming up next.

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12 minutes until the closing bell. back to kate for a look at the key stocks to watch. >> mike, shares of cisco jumping today to new highs today as citi says it sees opportunities for a.i. to play a bigger role in the tech company's business. analysts over at citi upgrading the stock to buy from neutral to $62. they point an investor rotation into networking equipment and out of semis and hardware. meanwhile shares of ulta

moving lower. the ceo warning of headwinds in the beauty industry, says they're pressured by more volatile consumer backdrop and stiffer competition, did reaffirm its full-year forecast after cutting it last quarter. back to you. >> all right. thank you. up next, we'll tell you what's sending shares of novavax sharply lower and what it might mean for the other big biotech names. that and much more when we take you inside the markezot ne. helps to build a stronger tomorrow. at pgim custom harvest, our unique direct indexing approach seeks to help investors achieve better after-tax outcomes. pgim investments. shaping tomorrow, today

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we have more on housing stocks. united lifting airline stocks. phil lebeau has more. and katie stockton on what she's watching in the crucial final minutes of the trading day. angelica, fill us in on the novavax movement. >> novavax shares down nearly 20% today. that's after the fda putting the flu shot trials on hold after the report of a series adverse -- serious adverse event. one person who received the experimental shot developed motor neuropathy. this report coming a year after the person got the covid-flu combination shot. novavax saying the clinical hold could delay its phase-three flu trials. the company is working on the covid-flu vaccine and the stand-alone flu shot. so of course this is not great news for them. we'll have to see if they can get that resolved and how quickly. >> for sure. angelica, thank you so much. diana, housing stocks, mortgage appli

applications, a noisy story. >> reporter: obviously the stocks are going up bun on fundamentals. -- but not on the fundamentals. mortgage rates rose that tanked application dropping 17% from the week before. the average rate on 30-year fixed went to 6.25% with loans of 20 percent down. refinance demand was 26% week to week. still 111% higher than the same week a year ago. rates today over a full percentage point lower than they were a year ago. mortgage demand to buy a home fell 7% for the week, up 7% higher up than the same week one year ago. the homebuilder don't seem to care much today. the homebuilding eft itb is higher on the day, as are all of the big builders. that's likely because mortgage rates really haven't moved at all this week. they're also able to buy down mortgage rates to get customers in the door. again, it's definitely not on the fundamentals. >> yeah. certainly the homebuilders have their own advantages. thank you so much. phil, these airlines running higher, what's behind this? >> reporter: you know how this

goes, mike. when they take off, they take off. they may have been really down in the dumps for most of this year, but look at united. now at a 25-week high after -- 52-week high after beating the street on the top and bottom line. yesterday afternoon the conference call, three things driving the stocks hire. first of all, positive seat revenue, that is the key metric that everybody is focused on. they swung to that in the third quarter. united and delta did. we're going to see what the others have to say. there's reduced capacity and solid holiday demand. that is the early indication of what to expect. and as a result, when you take a look at the other airline stocks today, they were all up substantially for most of the day. next week don't forget that we hear from american and southwest. so the airline stocks, they're finally taking off. sorry for the pun. >> yeah, for sure, phil. quickly, i mean, in capacity reduction idea, the idea that there's a lot of this uneconomic capacity being taken away. clearly the market is saying there is going to persist. do we have clear signals that

that's the case? >> reporter: well, you know, as far as the booking -- as far out as you can look at the booking trends. they can tell when somebody is the bad actor and starts adding a lot of seats. that's been stripped out for fourth quarter and into the beginning of the first quarter. >> gotcha. appreciate it. katie, this markets is getting a lot of accolades for the strength of the trend, the fact that most stocks are participating to the upside. i think you characterize yourself as neutral on the indices. what brings you there? >> reporter: that's right. the short-term momentum is the upside now behind the major indiceses, but we expect that as soon as the likes of nvidia falter, that we will have a problem. meaning that sentiment can be considered overly bullish or too greedy. that's the fear and greed index for one, it reached 5%, extreme. that makes it harder for the market to hold over bought conditions which are in place across timeframes. we are looking for a pullback or

even more significant corrective phase in q4 for the s&p 500 to mark the start of more range-bound environment. it is supported by the vix which has sort of entered a newer, higher volatility cycle. the momentum is the upside behind the vix. and also we have some signs of long-term exhaustion. you know the market indicator well. the demark indicators show signs of exhaustion that we really haven't seen for the market collectively since late 2021. it's not to say we're getting into a bear market cycle, but it would enhance the possibility that we do get into a choppier environment. >> interesting. and katie, do you give credence to people celebrating things like banks leading and cyclical stocks doing better than defensive stocks? either for the macro signal it's sending or that those could become perhaps leaders down the road? maybe that doesn't help the market cap when it indices that much, i wonder your thoughts on that. >> it's been a nice move from

the financial sector, and that's contributed to what we've recently seen from the s&p 500. i would say it's too early to suggest that we have any kind of breakout in relative strength terms for financials, so we can't be convinced that this is a lasting phase of outperformance. most of our metrics suggest that financials will be more in line performers and that actually cyclicals may in part rotate out of favor depending on what you're looking at. the real key, of course, is that the mega cap heavy sectors and mega caps included, of course, are poised to lose their leadership stronghold to a greater degree. and i think that's the problem that the market faces. >> yeah, that's a good point. it's clearly a more stable market, more reliable one, the mega caps are working. and i guess on that point, russell 2000 making another upside try. close to 2,300, up 1.6% today. what does that tell you about whether it's in fact sustainable? >> reporter: for the small-cap sector or segment of the market

we'll seen a little relative stream shift. if you look at the long-term trends, they're still to the downside in the russell 2000 index versus the s&p 500. and we also do not have a breakout of any kind in the russell 2000 which is still sort of stalled below resistance from the summertime highs and beyond. we don't teal like we have an action item on the small-cap front, not yet. we are looking for the fees of underperformance to give way to something closer to in line, and that could just mean neutral trading as well for the russell 2000. >> and then maybe a quick word on bonds. the treasuries look like they might be getting some upside momentum and yields. they backed off this week. what do you think there? >> reporter: i think that we have an entry point, in fact, in the likes of tlt, a proxy for the treasury bonds. you know, we feel that there's signs of downside exhaustion, short term in nature, but within the context of a gradual long-term up trend that was associated with the big turnaround for fixed income

proxies. so we do feel like we have an entry point at least short term if not longer term for treasury bond proxies like tlt and in following of course we are looking for yields stall. we don't think there's going to be dramatic downside long term, but they've had a great move within the context of the cyclical down move. we think it's entire up here. >> all right. appreciate the time today. thank you so much. >> of course. >> as we head into the close, the s&p 500 is about .5% higher. it is just short of the former closing high. the dow looks like it is on track to close at a new record high, right now, 3-1 upside to downside volume on the new york stock exchange. that's going to do it for "closing bell." over to "overtime." it's bell marks the end of regulation. cocoa merchants association of america ringing the closing bell at the new york stock exchange. vine hilpi